States losing millions on “green” companies too

July 11, 2012 05:54

[T]he record for companies touted as part of a renewable energy revolution in the state [NM] is looking pretty dismal.


By Rob Nikolewski at New Mexico


For a time there, it looked easy to be green in New Mexico. But in the past couple years, the record for companies touted as part of a renewable energy revolution in the state is looking pretty dismal.

In January of 2010, the administration of then-Gov. Bill Richardson extolled a series of “green” industries coming to the state, pointing to at least three projects that “will create nearly 500 new green jobs” in the state. But a review shows that the optimitism of just a couple years ago has crashed into economic reality.

Here’s a look at what has happened to some of those projects:

Schott Solar

Last month’s announcement that Schott Solar was shutting down its manufacturing plant in south Albuquerque was met with shock, then outrage.

The shock came from the 250 employees who will be laid off by the end of the summer. The outrage came from New Mexico taxpayers who learned one day later that Schott Solar isn’t legally required to return one dime from the $16 million in grants given to the company because the Richardson administration did not attach any “clawback” provisions to the money (something that the city of Albuquerque and Bernalillo County did when it gave Schott $1 million and $500,000, respectively).

“It’s infuriating,” Gov. Susana Martinez told KOB-TV of the money that was awarded through the Economic Development Department and approved as part of a larger capital outlay bill passed by the state legislature.

In January of 2009, Richardson appeared at news conference with Schott executives extolling the company and Richardson’s dream of turning New Mexico into the “Solar Valley” — a renewable energy version of California’s Silicon Valley.

“New Mexico has landed the premier solar manufacturing company in the world, right here,” Richardson said at the news conference in May of 2009. (Click here to see the video from a German TV network.)

But Richardson was not alone among politicians singing Schott’s praises.

Congressman Martin Heinrich (D-New Mexico) took to the floor of the House of Representatives in June of 2009, saying, “Just a month ago, I participated in the grand opening of a hundred million dollar Schott Solar manufacturing plant in Albuquerque, which is on track to eventually employ 1,400 people.”(Click here see the video.)

Heinrich’s YouTube page also includes a speech he gave hailing Schott Solar at a news conference in May of 2009:

Now Schott’s bright future is gone.

“It’s one of those situations where, as a citizen legislature, you hope and trust that the agencies in charge of such things do their due diligence,” noted Roundhouse fiscal hawk Sen. John Arthur Smith (D-Deming) told Capitol Report New Mexico.

“Here your are, trying to walk a not so careful line and generate jobs and it backfires,” Sen. Smith said. “It sounded solid.”

Schott, which is based in Germany, blamed the economic downturn and the production of less expensive solar products in places like China as the chief reasons for its demise but in the meantime, New Mexico taxpayers are left $16 million in the hole.

Don’t be surprised if in the next legislative session a bill is introduced making it mandatory for all future deals to include clawback provisions.

“I’m sure, with the benefit of 20/20 hindsight,” Smith said, “I think that obviously that will be there in the future.”


Advent Solar

Taxpayers also got stuck losing millions back in 2009 when Advent Solar went belly-up. The deal was similar to the Schott transaction but instead of going through the Economic Development Department and the legislature, Advent Solar received nearly $17 million through the State Investment Council (SIC) and its private equity arm.

According to SIC spokesman Charles Wolman, the state has managed to recover just about $1.5 million after Advent’s assets were acquired by another company (Applied Materials) at just a fraction of the project’s original investment. That means taxpayers were left footing the bill for about $15.5 million in the Advent Solar deal.

“That was an equity investment and, obviously, when you have an equity investment you don’t get your money back …,” Fred Mondragon, the state’s Economic Development secretary under Richardson, told the Albuquerque Journal in 2010. “It was not a loan. It was not an investment in facilities.”

Mondragon was also the Economic Development secretary when the Schott Solar deal was done.

When you take the Advent Solar loss together with the Schott Solar transaction, the people of the state ended up losing $31.5 million in the two investments.

Update 7/9: An Internet search found that the head of Advent Solar, Russell “Rusty” Schmit, made $4,900 in political contributions between 2006-2008. The largest benificiary was Bill Richardson, who received a total of $2,300 for his unsucessful bid for President in 2008. Sen. Jeff Bingaman (D-New Mexico) received $1,000 from Schmit in October of 2006 and Sen. Tom Udall (D-New Mexico) received $250 in 2008 while Schmit gave $850 in December of 2007 to the Democratic Senatorial Campaign Committee. Schmit has been serving on the advisory committee of Sun Mountain Capital, which oversees private equity accounts for the aforementioned State Investment Committee — where Advent got nearly $17 million. Just two weeks ago, Schmit was named the CEO of Banyan Energy, a solar company based in Berkeley, California.



A Richardson news release from January of 2010 boasted that wind tower manufacturer Johnson Plate and Tower was coming to Santa Teresa and green building projects manufacturer C/D2 Enterprises would move to Gallup.

The Johnson Plate and Tower deal promised to create 150 jobs and the C/D2 operation called for eventually hiring about 40 employees at wages as high as $23 an hour.

“It won’t happen,” David Nichelini of Johnson Plate and Tower told Capitol Report on Thursday (July 5). “The whole wind market has evaporated.”

Nichelini said a large degree of the fabrication for wind towers has gone overseas to China and South Korea so the company has passed on its plans in Santa Teresa.

“New Mexico won’t happen,” he said. “We basically can’t do that.”

The only good news for taxpayers is that Johnson Plate and Tower didn’t get any handouts from the state. The company was awarded $2.4 million in US Department of Energy tax credits but Nichelini said the portion assigned to New Mexico was never applied.

As for C/D2 Enterprises, “We did build the plant and we didn’t hire 40 people,” co-founder Charlie Ward said by telephone, adding, “We’ve hired a couple people at the present time” before referring all questions to partner Don Dickens, who Ward said was on vacation in Hawaii. Attempts to e-mail Dickens have been unsuccessful so we’ve been unable to determine if the project received any state funding or tax breaks.


GA Solar, a subsidiarty of Corporacion Gestamp

Also in January of 2010, the company based in Spain made a much-heralded announcement that it was spending $1 billion to construct a giant, 300-megawatt solar plant in Santa Rosa that called for hiring 300 construction workers while supplying enough energy to power 50,000 homes for a year.

Capitol Report New Mexico called the corporation’s North American office in San Francisco to get a status update on the plant and were given the phone number of business development manager Michael Moretz. After speaking to Moretz for a few seconds he told us to call him back but three subsequent voice-mail messages on three subsequent days went unreturned.

Last September, the Albuquerque Journal reported the plant’s construction had been delayed but quoted Moretz saying the project was still on track, with construction to begin either this year or in 2013.

The story said the plant expects to employ 75 people full time. No word on whether the project has received state grants or tax credits.



Signet Solar

In December of 2008, the Menlo Park, California-based company announced that it would build a factory in Belen that would provide solar panels for a 700-acre, 600-megawatt solar farm providing the majority of the power for the community.

But in April of 2010, the company cancelled plans to construct the $840 million facility after failing to get a Department of Energy loan. Two months later, the company made headlines when its German division declared it was insolvent.

In the 2009 legislative session, Signet Solar was targeted to receive $3 million through a capital outlay bill but the current Economic Development Department tells us the money was never delivered because the Belen plans never materialized.


High Lonesome Mesa Wind Project

This project was the second wind-generating plan put in place in New Mexico by the Edison Mission Group and appears to be doing fine.

The first Edison wind project was placed in the San Juan Mesa in 2006. The High Lonesome Mesa project is located in Torrance County and became operational in July of 2011. The project reportedly cost $190 million, comprises 40 wind turbines and expects to pay $24 million in taxes and fees to the local and state economies over the next 30 years.

A spokesman for Edison International told us Friday that a project of the size of High Lonesome Mesa “typically employs 4-5 full time employees.” The spokesman said he didn’t know off-hand if any state or local tax credits or grants were involved in the project but said he would get back to us on Monday (July 9).



Solar Array Ventures

This Austin, Texas-based group was also praised by Heinrich in his speech on the House floor in 2009 and originally planned to build a 225,000-square-foot solar plant in New Mexico.

But at the start of 2010, the company’s chief financial officer told the Austin Business Journal the project had not started and no date for been set to begin work.

The company, which needed to raise $200 million for the project, got as much as $110 million but couldn’t find additional investors to line up $90 million in loans, the publication quoted the CFO saying.

The state and Bernalillo County offered $30 million in incentives and, presumably, those taxpayer dollars were never spent since the project never got off the ground.

Capitol Report New Mexico called and left a voicemail message with the company’s head of marketing on Friday afternoon (July 6) to confirm that no taxpayer credits or grants were lost and to see if the company has any plans of returning to the project. If and when we get a return phone call, we’ll post his reponses.


And consider this previously from usACTIONnews:

Consumers pay 38% extra for ‘renewable’ energy mandates

States with renewable energy mandates average 38% higher electricity rates for consumers with some like New York paying double. 29 states have renewable energy mandates and 7 others have renewable goals.

By Michael Whipple, Editor

States with renewable energy mandates (REM) average 38% higher electricity rates for consumers with some like New York paying double according to a study by the Institute for Energy Research (IER). 29 states have renewable energy mandates and 7 others have renewable goals. See how your state ranks in electricity and REMs with the interactive map from IER.

Although REMs cannot be blamed for the total disparity in electric rates, the high cost of renewable energy being passed on to consumers is a significant factor.

A report by The Heritage Foundation finds REMs will cost over one million jobs and raise electricity rates by more than one third:

  • Raise electricity prices by 36 percent for households and 60 percent for industry;
  • Cut national income (GDP) by $5.2 trillion between 2012 and 2035;
  • Cut national income by $2,400 per year for a family of four;
  • Reduce employment by more than 1,000,000 jobs; and
  • Add more than $10,000 to a family of four’s share of the national debt by 2035.

Some states are even paying more for electricity they don’t receive to subsidize renewable energy projects in other states. Michigan will receive no benefits from a wind surtax but will have to pay as much as a billion dollars in increased rates. This is part of Obama’s different way to ’skin the cat’ and have agencies implement his energy policy without congressional approval. The day after the November election Obama realized his cap and trade scheme could not pass congress. “Cap-and-trade was just one way of skinning the cat; it was not the only way,” Obama said “I’m going to be looking for other means to address this problem.”

An a previous article ‘Subsidy for wind energy will raise electricity prices on everyone‘ we explained how the Federal Energy Regulatory (FREC) will help him ‘skin the cat’. It will force Michigan to pay for transmission lines needed for wind farms in Illinois:

From WSJ:

“In fact, this is the first step in a FERC scheme to socialize transmission costs nationwide. In June FERC drafted a rule to create a new national transmission pricing policy that would link wind and solar energy projects to the national electricity grid. (See our November 7 editorial, “The Great Transmission Heist.“)”

“Let’s be very clear on what’s happening here: Mr. Wellinghoff and FERC are trying to establish by regulatory fiat a national energy policy that Congress has refused to endorse. Last summer Congress rejected the Obama Administration’s renewable energy standard law because it would have inflated power costs. So the fiefdom at FERC is unilaterally moving ahead to require that industries and homeowners pay a surtax on their utility bills for a nonexistent renewable energy policy. This is similar to the EPA’s initiatives to regulate carbon even after Congress rejected cap and trade.”


“The wind industry has essentially conceded that without the ability to socialize the cost of multibillion dollar transmission lines, its projects can’t compete with coal, natural gas and nuclear power.

The FERC pricing scheme is politically insidious, and arguably unconstitutional, because it enables states with renewable standards to export the costs of those policies to other states without these laws. Why should a factory in Pontiac, Michigan subsidize the wind energy costs of a plant in Elgin, Illinois?”


REMs are proven job killers. The IER study describes examples from different ccountries that have fallen for the REM scheme:

But trying to create jobs through renewable subsidies has proved to be a failure. In Spain, for example, it is estimated that 2.2 jobs were lost as an opportunity cost of creating one expensive, subsidy- and set-aside-dependent job in the renewable sector. In Germany, per worker subsidies in the solar industry are as high as $240,000 per worker. The situation in Denmark is similar. Danes have to pay the highest electricity prices in the European Union, and they pay subsidies of nearly $400 million a year to wind producers (in a country with less than 2 percent of the population of the United States).

The Obama administration conspired with the Center for American Progress to discredit and cover up the job data from Spain.  Not surprising since Spain’s economy was on the verge of collapse from over spending. Christopher Horner at Pajamas Media wrote about the efforts of the Obama administration and lobbyists to sell the idea of ‘green’ jobs:

After two studies refuted President Barack Obama’s assertions regarding the success of Spain’s and Denmark’s wind energy programs, a Freedom of Information Act (FOIA) request reveals the Department of Energy turned to George Soros and to wind industry lobbyists to attack the studies.

Via the FOIA request, the Competitive Enterprise Institute has learned that the Department of Energy — specifically the office headed by Al Gore’s company’s former CEO, Cathy Zoi — turned to George Soros’ Center for American Progress and other wind industry lobbyists to help push Obama’s wind energy proposals.

Back in the U.S., the American Wind Energy Association — the lobby for “Big Wind” in Washington, D.C., which includes a few Spanish wind giants — also attacked the publication of the Spanish paper.

Soon, the Obama administration published a five-page talking points memo assailing the economic assessment — written by two young, non-economist, pro-wind activists from the National Renewable Energy Laboratory (NREL) in Boulder, Colorado.

NREL is an extension of the Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE). EERE is run by Assistant Secretary of Energy Cathy Zoi, who, until assuming this post, served as CEO to Al Gore’s Alliance for Climate Protection. Zoi is responsible for many millions of the “green jobs” stimulus dollars pushed for and designed by Van Jones (this according to Jones himself).

Scotland’s wind farms are unable to cope with the freezing weather conditions – grinding to a halt at a time when electricity demand is at a peak, forcing the country to rely on power generated by French nuclear plants.

Other attempts at ‘renewable’ energy have had costly results in jobs and dollars here in the US. Two different solar panel plants have closed in the last year despite hundreds of millions in subsidies.

The day after the 2010 election San Francisco Bay Area Solyndra, the great green hope, a government subsidized solar plant, shuttered its original manufacturing plant and scaled back plans for those thousand jobs that Obama had heralded just a few months prior. Solyndra had obtained a government guaranteed loan for almost half a billion dollars. After $58 million in subsidies Evergreen Solar Inc. eliminated 800 jobs in Massachusetts and shut its new factory just two years after it opened and will rely on its plant in China.

Some states have secretly passed on additional cap and trade costs to consumers making corporations like Goldman Sachs, Morgan Stanley, Merrill Lynch, JP Morgan Chase and others a handsome profit. In a previous story we posted from New Jersey WACTHDOG:

Secrecy and greed are polluting the Regional Greenhouse Gas Initiative, the nation’s first mandatory cap-and-trade system.  Under the RGGI scheme, the smell of profiteering is powerful.  New Jersey and nine other Northeast states have sold $662 million in carbon dioxide permits since 2008.

RGGI is the prototype for two other mandatory regional systems scheduled to start in 2012.  The Midwestern Greenhouse Gas Reduction Accord will bring cap-and-trade to Illinois, Michigan, Wisconsin, Minnesota, Iowa and Kansas.  The Western Climate Initiative adds California, Oregon, Washington, Arizona, Mexico, Utah and Montana – plus British Columbia, Ontario and Quebec.  Manitoba is a member of both cooperatives.

Together, the three regional systems will encompass 23 states with roughly half of population in the U.S. – plus four Canadian provinces with more than three-quarters of that nation’s populace.

The bottom line:  A cap-and-trade system that favors secrecy over public disclosure – and Wall Street over consumers – now has the inside track to become the de facto law of the land, even without an act of Congress.

What could possibly be the purpose of all this ‘alternative’ and ‘green’ energy manipulation? Brian Sussman at Human Events explained it well describing the motives behind cap and trade:

“Concurring green interests perceive cap-and-trade differently.  Environmentalists envision it as a progressive engineering tool that will coerce both industry and individuals to emit less CO2.  Wind and solar companies see it as an instrument to manipulate the market, which they hope will force their companies to grow.  Socialists regard it as a way to redistribute wealth by offshoring America’s manufacturing sector to the Third World.  The elite identify cap-and-trade as a means to acquire control of the population (because if they can govern the amount of energy the people use, they can better control those people).”

Even if you believe in man caused global warming (AGW) (40% of legitimate scientists do not) all of these mandates, higher rates and CO2 regulations won’t make a discernible difference in the earth’s temperature. EPA’s Own Estimates Say Greenhouse Gas Regs Could ‘Slow Construction Nationwide for Years’ — and Take a Century to Reduce Temperature 0.0015 Degrees.

As Shannon Love put it in ‘Why Alternative Power Is and Will Remain Useless’:

“Here’s a fact you won’t see mentioned in the public policy debate over “alternative” energy:

There exists no alternative energy source, no combination of alternative energy sources, and no system of combinations of alternative energy sources that can fully replace a single, coal fired electric plant built with 1930s era technology.


Yet many want to make this group of functionally useless technologies the primary energy sources for our entire civilization.”

The Obama administration certainly seems to be doing all it can to raise the costs of all types of energy. But we should not be surprised. After all, Obama warned us that under his plan electricity rates would ‘necessarily skyrocket’. The only thing ‘green’ about renewable energy is the money going down the drain. Renewable Energy Mandates are just another way to bilk the taxpayers out of trillions of dollars.

Michael Whipple, Editor

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